Cash Flow Forecasting.

Slides:

Advertisements

Similar presentations

Cash flow THE TIMES 100. What is cash? Cash is notes, coins and bank deposits that provide firms with the spending power to pay their bills and expenses.

Advertisements

SHORT TERM SOURCES OF FINANCE. BANK OVERDRAFT ADVANTAGES Allows the firm to take out more money than they actually have in their bank account. Relatively.

Accounting and finance Managing cash flow problems.

Introduction to Small Business

Business Studies Accounts & Finance An Introduction.

Chapter 11 – Forecasting and Short-Term Financial Planning  Learning Objectives  Understand how sales forecasts are used to predict cash inflow  Understand.

Forecasting and Short-Term Financial Planning

Cash Flow Forecasting AS Business Studies. Aims and Objectives Aim: Understand cash inflows and outflows Objectives: All: Recap on costs, revenues and.

Cash Flow. Introducing the Topic Asian Glasses – Page 493 Read the case study and answer the questions we will discuss shortly.

Forecasting of cash flows. On completing this chapter, you will be able to:  Understand the importance of cash to business.  Explain the difference.

3. 20 Using a cashflow forecast Using a cashflow forecast What is ‘cashflow’?  The flows of money into and out of the business  Money flows in.

FORECASTING CASH FLOWS LO: TO UNDERSTAND THE PURPOSE AND FUNCTIONS OF A CASH FLOW FORECAST.

Tutor2u ™ GCSE Business Studies Revision Presentations 2004 Budgets & Business Planning.

Improving Cash Flow AS Business Studies. Aims & Objectives Aim: Understand ways of improving cash flow Objectives: Identify causes of cash flow problems.

CASH FLOW JW Int2. What Is A Cash Budget? All businesses need to monitor their LIQUIDITY i.e how much money the business has in order to pay off its debts.

Start up money Capital“money invested by the owners” - it can be a substantial amount - limited to personal wealth (Sole trader/partner) - LTD/PLC can.

BUSS2.2 Improving Cash Flow Finance Improving Cash Flow Cash Flow This unit follows on from the study of cash flow in Unit 1- Using Cash Flow Forecasting.

Cash Flow ACCOUNTING & FINANCE. Cash Flow Calculation and Interpretation of Cash Flow Forecast Movement of money into and out of a business.

CASH MANAGEMENT Cash Receipts and Payments. CASH FLOWS Life blood of a business Monitors surpluses Plan for shortfalls Plan for financing arrangements.

EDEXCEL BUSINESS for GCSE © 2009 Ian Marcousé and Naomi Birchall Section 3 Putting a business idea into practice.

Chapter 3: Finance Abiel Zewolday Gloria Evstatieva Peter Dolittle Gabriela Perdomo.

Cash flow planning Unit 8.

FINANCIAL STATEMENTS. Why Use Financial Statements? Investors and bankers Investors and bankers Suppliers and creditors Suppliers and creditors You and.

Cash Flow. Lesson Objectives By the end of the lesson you should be able to:  Explain the advantages and disadvantages of cash flow forecasts.  Identify.

 A cash flow forecast is a financial document that shows the expected movement of cash into and out of a business in a particular time period.

IB Business and Management

Working Capital.  Define working capital and explain the working capital cycle Prepare a cash flow forecast from given information Evaluate strategies.

Topic 3: Accounts & finance

Source of finance All businesses need money to finance business activity. This can be for the initial setting up of the business, for its day-to-day running.

Accounts & Finance Working Capital. Learning Objectives Define working capital and explain the working capital cycle Prepare a cash flow forecast from.

IB Business and Management

Mr Stokes. To understand the meaning of cash flow To understand why cash flow is important to a business To be able to construct & interpret a cash flow.

Cashflow recap What are the main inflows for a business? What are the main outflows? What term describes inflow – outflow? Sales revenue (number of sales.

Cash flow v Profit Unit 19.

Lim Sei cK.  Cash flow describes the movements of cash into and out of a business  When you look at the bank statement of any business, you soon.

Understanding Business Cash Flow. About the SBDC Eighteen Centers in Pennsylvania More than 1,000 Centers Nationwide The SBDC network.

Look at the following infographic

IGCSE Business Studies Cash Flow. What is meant by cash flow? Cash flow is the flow of cash in and out of a business, over a period of time. Cash inflows.

1 Using a cashflow forecast L/O: demonstrate an understanding of cash flow.

CASH FLOW PLANNING UNIT 8. THIS UNIT WILL EXPLAIN THE IMPORTANCE OF CASH FLOW TO BUSINESS OPERATIONS HOW FIRMS CAN RUN SHORT OF CASH AND THE LIKELY CONSEQUENCES.

Starter QUICK QUESTIONS Complete the following quick questions in your workbooks. Indicate how sure you are, using the following system I am sure this.

IB Business and Management

3.7 Cash Flow Topic 3: Finance and Accounts. Working Capital The capital needed to pay for raw materials, day-to-day running costs and credit offered.

Lim Sei cK.  Cash flow describes the movements of cash into and out of a business  When you look at the bank statement of any business, you soon.

Management of Working Capital. Balance Sheet A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific.

Cash flow Business Cash inflow £££££££ Cash Outflow.

Working capital is the money a business needs to pay its short term expenses. These include: Expenditure such as staff training Raw materials or stocks.

Cash Flow Forecasting. STARTER Think about the bill payer in your household. What things need to be paid each month? How are those bills paid for?

Cash Flow – the sum of CASH payments into a business less the sum of CASH payments out Liquidation - when a firm ceases trading and its assets are sold.

Cash flow management. Key terms Cash outflows: money leaving the business Cash inflows: money coming into the business Opening balance: the amount a business.

Starter Cash flow? Define cash flow forecast. Give a list of inflows and outflows. If cash flow is negative what does this mean? Why is it linked to business.

Year 12 AS Business Studies Improving cash flow. Causes of cash flow problems Seasonal demand Lack of planning (eg stock management) Over-investment in.

 A cash flow forecast is a financial document that shows the expected movement of cash into and out of a business in a particular time period.

Learning objectives Understand key aspects of financial management Understand how to analyse the difference between increasing cash inflows and reducing.

Cash Flow Forecasting & Statements.  By the end of the lesson…  All students will be able to describe what cash flow is (Grade C)  Most students will.

Unit 3 – Sources of Finance All types of business need money to? Write 4 things down. Buy supplies – from suppliers Pay staff Buy equipment Pay bills Pay.

Lesson Objectives All students will understand Most students will

CASH-FLOW FORECAST.

and short term financial planning

GCE PROFESSIONAL BUSINESS SERVICES

Sources Of Finance Miss Faith Moono Simwami

Chapter 26 – Cambridge Tutorial

1.3.4 Forecasting cash flows

Topics Covered Business Costs Revenue Profit Expenditure

What are the advantages and disadvantages of a bank loan?

Cash flow THE TIMES 100.

Cash Flow Forecasting.

Business Accounts: the Balance Sheet

Presentation transcript:

Cash Flow Forecasting

Cash Flow Cash flow is the relationship between the money coming into a business and the money going out. Sales revenue Own capital Loans Rent Materials Wages Utility Bills Advertising

Cash versus Profit Good cash flow does not mean profit! You may have enough money to pay the bills but if it is taken from loans or your own pocket it is not profit. Equally you can make a profit over a year but have times when there is a cash flow crisis.

Cash Flow Forecast A cash flow forecast is a prediction of future cash inflows and outflows. Firms carry out cash flow forecasting to help them plan and manage their shot-term finances.

Uses of Cash Flow Forecasting Helps a business to plan ahead for future finances. Helps to identify potential problems and months when the business will have a cash shortfall. Firms can then make changes to improve cash flow A cash flow forecast will be needed to obtain finance such as a bank loan

Managing Cash Flow A business needs to: Forecast cash flow Identify any future cash flow problems such as a deficit Analyse the cause Take action to prevent a cash flow crisis

What are the causes of cash flow problems? A fall in the number of customers (low sales) Giving customers too long a credit period Bad debts (customers not paying) Paying out for supplies, salaries etc before receiving revenue from customers Large payments for bills e.g. electricity bills paid quarterly Purchasing large pieces of equipment without sufficient funds. Seasonal demand

Exam Focus: What cash flow problems is WDP likely to face? Paying out for staffing, supplies & overheads before receiving revenue from customers as it is likely to give customers a credit period. Bad debts – a possibility in the current economic climate. Purchasing pieces of equipment e.g replacing computers without having sufficient funds arranged

How can cash flow be improved? Promote or attract new customers to get revenue Obtain trade credit from suppliers Reduce credit periods for customers or obtain deposits/part payments Actively chase debts Put off purchases of equipment or lease them Spread payments of bills Arrange an overdraft facility.

Practice Question Tom is responsible for dealing with the financial management of WDP. One of the ways he does this is by managing the cash flow. (a) Using examples of cash flow problems, explain how Tom could limit their impact.(8)